Mumbai: The year 2016 has witnessed over 400 deals valued around $11.9 billion in the first quarter compared to $9.4 billion across 352 deals in the corresponding quarter in 2015, according to Grant Thornton India Llp.
Key drivers for the deal activity continued to be domestic transactions and cross-border transactions. Outbound deal values grew more than four times compared to the previous year owing to four big-ticket transactions demonstrating revived business sentiments, the report added.
Mergers and acquisitions (M&As) alone were valued at $8.9 billion, indicating a 31% growth.
“The primary driver for M&A growth was the strong outbound interest contributing to over 20% of total deal values. Inbound transactions continued to be the highest contributor with deals valued around $3.5 billion contributing to about 30% of total deals,” said Harish H.V., partner at Grant Thornton.
Private equity (PE) investments in this quarter were valued at around $3 billion, growing a steady 14% year-on-year. PE investment volumes have also increased by a healthy 27% with 280 deals.
The current year has witnessed some big-ticket transactions such as the acquisition of Tass-Yuryakh oilfield for $1.3 billion by Indian Oil Corp Ltd, Oil India Ltd and a unit of Bharat Petroleum Corp. Ltd, and Naspers Group’s $250 million investment in Ibibo Group Pvt. Ltd.
“Another key trend we noted in the first quarter was the announcements of transactions by large groups to sell off certain core assets in the cement, power and other sectors to reduce their group debt. We expect to see several of these culminate in transactions in the second quarter and rest of the year. This will happen on account of the fact that several large groups need to deleverage,” Harish added.
Continued traction in private equity (PE) transactions with over 27% year-on-year growth in volumes was driven by start-ups and e-commerce investments. On the M&A front, core sectors such as telecom, energy and automotive attracted big-ticket transactions which together contributed 50% of the total M&A deal values. Against this, IT and banking sector topped in terms of volume of transactions. PE/VC investments, on the other hand, continue to be attracted to the e-commerce or consumer technology sector, with the quarter witnessing $970 million across 28 investments. More than 180 start-ups received investments of more than $454 million.
The growth in the deal value was driven by 19 big-ticket deals valued above $100 million which contributed to over 68% of total deal value in this quarter.
The telecom sector led deal activity during the last three months and contributed around 19% of the total deal value with two deals valued over $500 million–Orange SA’s acquisition of Bharti Airtel’s operations in Burkina Faso and Sierra Leone for $900 million and Bharti Airtel’s acquisition of Videocon Telecommunications Ltd-1800 MHz spectrum in six circles for $660 million.
The other sectors apart from telecom which contributed to over 55% of the total M&A deal values include energy and natural resources, automotive, manufacturing, pharmaceuticals and information technology.
The current quarter saw one of the biggest exits by KKR from an India focused investment—the US private equity giant sold its stake in Alliance Tire group to Japan’s Yokohama Rubber for a deal consideration of $1.2 billion.
Manufacturers suppliers Exporters B2B Directory dial24hour.com 